Overview : Fabrice Desnos - credit where it's due

Bully boy or scapegoat? That’s the question that small business might be asking at the moment when they think about their trade credit insurers. The biggest in the UK is Euler Hermes and chief executive (and former CFO) Fabrice Desnos has made it clear what he thinks: ‘Insolvencies are not our fault.’

What’s happened?

As the credit crunch has bitten deep into the UK economy and as the recession tightened its grip, one of the problems that has exacerbated the plight of many businesses is the withdrawal of trade credit insurance.

When Woolworths went bust, its decline was accelerated by the evaporation of credit insurance for its suppliers.

Two weeks ago Euler Hermes withdrew cover from suppliers to frozen food giant McCains. Euler wanted access to monthly management accounts ­ something McCains wasn’t willing to grant. Everywhere you looked there was a story about credit insurance accompanied, veiled or otherwise, by criticism of the insurers.

Were they making things worse unnecessarily? Were they helping to drive businesses into the ground?

Or, were they merely reacting to circumstances at the coalface. So big was the problem that Alistair Darling chose last month’s Budget to launch the government’s own £5bn trade insurance scheme.

Euler’s Desnos quickly moved to claim the government’s offer mirrored the current position of credit insurers because it would still require the same level of documentation and proof that insurers had already asked for.

Desnos has not hesitated in putting himself about in the press to fend off attacks against his company and credit insurers in general. In so doing he has become the industry’s defacto representative and chief defender.

His background says he would not have been shy about coming forward. He knows the business inside out, having been with Euler for 13 years, serving both in France and UK.

Moreover, Desnos has a lofty academic background, having graduated from the Institut d’Etudes Politiques in Paris (known as SciencesPo for short), the elite school that produced Francois Mitterand and Jacques Chirac, as well as nearly every other senior French politician and diplomat you care to mention.

It’s also produced at least a dozen of the CEOs of France’s top 40 companies. He was made CFO in the UK in 2003 and four years later took the CEO’s post.

Desnos predicted the current predicament of retailers on the high street last year to The Times and has been widely quoted in Drapers, the bible for the fashion industry. He is also fond of a florid phrase. Last week he told Accountancy Age: ‘Some businesses would like to create a smokescreen by blaming somebody else.’

The Times quoted him, in Eric Cantona-like tone, on the rising rate of insolvency saying: ‘It’s like shaking a tree ­ the weakest fruit will fall and it will do so for a reasonably long amount of time.’

What will happen?

It’s safe to assume Euler and Desnos will stand their ground over management accounts and forcing companies to give up more information. After all, Desnos can go on defending his business safe in the knowledge that the government’s own credit insurance scheme has endorsed his due diligence policies.

Is it fair? The debate over this will rage on. More pertinent though is the argument over whether management accounts will actually do the insurers any good. After all, they’re not really designed for external consumption and can take some deciphering.

The worst case scenario is that the insurers fail to understand what they have in front of them and begin pulling even more policies. It’s an issue of minimising risk and Desnos’ responsibility will always be to his company.